Shares of MP Materials Corp. (MP.N), a leading producer of rare earth materials, plummeted over 5% on Wednesday after the company reported a smaller-than-expected loss for the third quarter but provided a cautious outlook for the remainder of the year.

The California-based mining company posted a loss of 12 cents per share for the quarter ended September 30, narrower than analysts' estimates of a 13-cent loss. Despite higher production and sales volumes of battery rare earths, the company's earnings were impacted by weaker pricing and demand for neodymium and praseodymium (NdPr), two key rare earth elements used in battery magnets.

Analysts at D.A. Davidson and TD Cowen acknowledged that while rare earth pricing has stabilized since the beginning of the year, legacy demand for MP Materials' products remains cyclically weak. However, they noted that expanding commercial opportunities and government support suggest compelling demand signals in the future.